This is an English translation of our Japanese article. The Japanese version and the Ministry of Internal Affairs and Communications materials are authoritative. Gift listings differ by municipality and are not guaranteed to continue.
Last updated: 19 September 2026. Based on the Ministry of Internal Affairs and Communications materials on the revision of hometown tax (furusato nozei) designation criteria, dated 17 June 2025 and 24 March 2026, and on fiscal 2024 donation figures.
Nothing changes for donors procedurally. What changes are the rules municipalities must follow. The range of items that can be offered as gifts narrows, a floor is set on the share of your donation the municipality must keep, and the recipients of fundraising spending are published. The result is that the choice of gifts will shrink. If you have something in mind, it is worth checking during September.
Three things that change on 1 October
Municipalities are designated for hometown tax one year at a time, from 1 October to 30 September. For the designation beginning in October 2026, three things change.
1The "local product" test gets stricter
Manufactured and processed gifts previously had to involve the main production stages locally with "appropriate value added". Now the maker must certify that more than half the value arose from production within the municipality, and the municipality must publish those certifications as a list before donations open. The share of value added is calculated on the basis of price as a rule.
The ministry's own material cites an appliance designed and sold locally but manufactured entirely overseas, where the municipality argued that "weighting local process days and their importance" put it over half.
2Promotional goods are narrowed
Goods made outside the municipality could still qualify if they were promotional character or original goods. In practice, food and outdoor equipment merely printed with a municipality's name or logo qualified regardless of whether they were really used for promotion; the ministry's material shows a tent and a beer can carrying municipal names.
Now all four of the following must hold: the item is clearly the municipality's own by shape or name; the municipality itself procured and distributed or sold it for promotion in the past year; there is a plan to do so during the designation period; and the volume offered as gifts does not exceed the volume actually distributed or sold.
3A floor on what the municipality keeps
This matters most. A standard sets the share of donations available to the municipality as spendable revenue at 60% or more, applied in stages from the October 2026 designation: 52.5% in the first year, then 55%, 57.5% and 60%. The 30% cap on gift procurement is unchanged, so what gets squeezed is shipping and payment costs, portal site commissions and administration. Municipalities must also publish how the money is used.
One more thing started this autumn. Municipalities must publish, for each recipient paid 1 million yen or more in fundraising costs, the name, address, amount and purpose. It applies from fiscal 2025 spending, published in September 2026. Donors can now see directly where a municipality's fundraising money goes.
Where does a donation actually go?
Fiscal 2024 receipts totalled 1.2728 trillion yen.
(227.5bn in FY2019)
(about 13% of receipts)
from the October 2026 designation
The money behind these donations is tax. The stated purpose of the scheme is to let people decide where their tax goes, yet of 1.2728 trillion yen collected, 590.1 billion went on fundraising, of which 165.6 billion flowed to portal site operators outside the municipalities. Fundraising costs have grown 2.6-fold in six years, from 227.5 billion yen in fiscal 2019. The fiscal 2026 tax reform outline named that 13% figure and said it "needs to be reduced as far as possible".
Donors can now check this themselves, thanks to the disclosure of recipients paid 1 million yen or more. Searching a municipality's site for its fundraising cost disclosure shows which operators it pays and how much — a way of choosing by how much of your donation stays local, not just by the gift.
Which gifts may disappear
- Food, household items and outdoor gear made outside the municipality and simply printed with its name or logo. They must now clear the four-part promotional test. Genuine mascot merchandise that municipalities really distribute or sell stays.
- Products designed and sold locally but manufactured elsewhere or overseas. With value added measured by price, arguments about "process importance" no longer work.
- Imported goods merely stored or aged locally. The ministry cites wine imported for 60,000 yen and supplied to the municipality at 120,000 yen while retailing at 80,000, with storage claimed as 60,000 yen of local value. Municipalities must now also record and publish the ordinary retail price, and will be told not to procure above it without good reason.
Municipalities that fail the criteria can lose their designation entirely. Nine have done so since the designation system began in June 2019 — for exceeding the 30% gift ratio, breaching the local product rule, or spending more than 50% on fundraising. Donations to a municipality after it loses designation do not qualify for the special deduction.
What to do in September
There is no need to rush to your limit. Anything above your deduction ceiling is simply a donation — admirable, but not the 2,000-yen deal. Three things are worth doing.
1Check the gift you want is still listed
Especially goods and processed items made outside the municipality. There is no guarantee they remain after October.
2Estimate this year's deduction ceiling
Calculate on 2026 income. This is the year the basic deduction and employment income deduction rise, so taxable income — and your ceiling — shifts. See the complete hometown tax guide.
3Decide about the one-stop exception
If you donate to five or fewer municipalities and do not file a tax return, send each an application form to arrive by 10 January. If you will file a return anyway, the exception is void and the return covers it.
Portal points are already gone. Since October 2025 portal sites may not award points to donors. Points from your card or payment app still apply. See choosing wisely after the points ban.
From 2027, a cap for high earners
The fiscal 2026 reform sets a fixed cap of 1.93 million yen on the special resident tax deduction, equivalent to employment income of 100 million yen, applying to donations from 2027. There is no cap on the donation itself, and the basic deduction still applies above it. For reference, the special deduction is 320,000 yen at an income of 20 million yen and 930,000 yen at 50 million — so very few people are affected.
What to do today
- Check whether the gift you want is still listed, especially goods and processed items made outside the municipality.
- Estimate your 2026 deduction ceiling on your expected income. Anything above it is not covered by the 2,000-yen rule.
- Look for the fundraising cost disclosure on the site of a municipality you support.
- If you plan to use the one-stop exception, keep to five municipalities or fewer.
Frequently asked questions
Do the procedure or the deduction change from 1 October?
No. The 2,000-yen structure, the ceiling calculation and the one-stop exception rules are unchanged. What changes are the criteria municipalities must meet, and donors feel it as a narrower choice of gifts.
Will the 30% gift ratio fall further?
No. The 30% cap on procurement cost is set in the Local Tax Act and is unchanged. What was decided is that the share available to the municipality must eventually reach 60%, starting at 52.5% for the October 2026 designation. The squeeze falls mainly on shipping and payment costs, portal commissions and administration.
Is donating in September better than later?
For the deduction, September and December are identical within the same calendar year. The only reason to hurry is that a gift you want may not be listed after October. Estimate your ceiling first, because donating beyond it does not give you the 2,000-yen deal.
What if a municipality loses its designation after I donate?
Donations made before the revocation takes effect are treated under the designation in force at the time. Donations made after it do not qualify for the special deduction. Nine municipalities have lost designation since 2019 and some have since been reinstated. You can check current designation status on the ministry's portal.
Sources
- Ministry of Internal Affairs and Communications, revision of hometown tax designation criteria
- Municipal Tax Division, on the revision of designation criteria (17 June 2025)
- Municipal Tax Division, on the notification amendment (24 March 2026)
- Municipal Tax Division, on designation criteria (13 May 2025)
- Ministry of Internal Affairs and Communications, how the deduction works
General information based on materials published as of 19 September 2026. Gift listings vary by municipality and are not guaranteed. Confirm your own deduction with your municipality or a tax office.
